/ US LLC + Indian Member · Updated 2026-10-25
US LLC with Indian Member K-1 Pass-Through Tax CA, foreign partnership + Section 90 FTC in India.
US multi-member LLC with Indian-resident member. US LLC files Form 1065 + issues Schedule K-1 to Indian member. Indian member taxed in India on worldwide income (if ROR status) including K-1 share. US-India DTAA + FTC under Section 90 to prevent double taxation. BQP end-to-end advisory for Indian members of US LLCs. Here's the complete framework.
DC
Written by CA Durgesh Chavda
Chartered Accountant (ICAI) · Founder, Bharat Quantum Prospera · US incorporation, India-US DTAA, FEMA ODI, NRI taxation, cross-border structuring · LinkedIn
/ US tax treatment of LLC + K-1
The partnership overlay.
- US multi-member LLC default: taxed as partnership (Form 1065) unless Form 8832 election to be taxed as corporation.
- LLC files Form 1065 annual + Schedule K-1 to each member.
- K-1 reports member's share of: ordinary business income, interest, dividend, capital gain, specific separately-stated items.
- Indian member as 'foreign partner': US LLC must withhold under Section 1446 - typically 37% on effectively connected income (ECI).
- Indian member files Form 1040-NR in US + claims 1446 withholding as credit.
- Treaty rate: US-India DTAA may reduce specific items (dividend 15/25%, interest 15%, royalty/FTS 10/15%).
/ Indian tax treatment
ROR Indian member taxation.
- Indian member's residential status (ROR / RNOR / NR) determines Indian taxability.
- ROR (Resident + Ordinary Resident): worldwide income including K-1 share taxable in India.
- RNOR: foreign-source income NOT received in India AND NOT accruing in India generally NOT taxable in India.
- NR: foreign-source income NOT taxable in India.
- K-1 income characterised in India under Section 5 + 9: specific head-wise (business income, interest, dividend, capital gain).
- FTC under Section 90 claimed against Indian tax: lower of (a) US tax on K-1 share, (b) Indian tax on same income.
- Form 67 filed before due date of ITR for FTC claim.
/ Specific scenarios
Common cases.
- US LLC with Indian-resident founder: founder taxed in US (K-1 share with 1446 withholding) + India (worldwide income). Full FTC against Indian tax. Specific DTAA tiebreakers if dual residency.
- Indian engineering/consulting services via US LLC: LLC's income may include fees for services rendered from India. Specific transfer pricing + Section 9 chargeability analysis.
- US LLC owns Indian subsidiary: dividend from Indian subsidiary + K-1 chain. Section 195 TDS 20% + treaty 15% + FTC in US.
- US LLC passive investor + Indian HNI member: K-1 share typically passive income + Section 9 chargeability + specific FEMA LRS limits.
/ FEMA LRS considerations
Investment outflow.
- FEMA LRS (Liberalised Remittance Scheme) limit: USD 250K per Indian resident per FY for all eligible remittances.
- Investment in overseas LLC/entities counts toward LRS limit.
- TCS under Section 206C(1G): 20% on remittances above INR 10 lakh for specific purposes - LRS covered.
- FEMA ODI (Overseas Direct Investment): if Indian resident holds controlling stake in overseas entity - specific ODI framework + Form ODI APR annual filing.
- Specific prior-approval scenarios: specific restricted sectors + specific exceeding thresholds.
/ BQP end-to-end engagement
What we deliver.
- US LLC + K-1 understanding + Indian tax implications analysis.
- K-1 head-wise characterisation under Section 5 + 9.
- FTC computation under Section 90 + Rule 128.
- Form 67 preparation + filing before ITR due date.
- Indian ITR preparation + FTC claim.
- FEMA LRS + ODI compliance (Form ODI APR if applicable).
- Section 206C(1G) TCS reconciliation + Form 26AS verification.
- Co-ordination with US CPA for Form 1040-NR + 1446 withholding + treaty position.
- Specific transfer pricing if Indian-service-origin K-1 income.
- Annual compliance + specific year-end planning.
Last updated: 2026-10-25.
/ Ready when you are
US LLC + Indian member tax planning?
K-1 analysis + Section 90 FTC + Form 67 + FEMA LRS + ODI + US CPA coordination. BQP end-to-end engagement. durgesh@bharatquantumprospera.com | WhatsApp +91 78018 87130.
FAQ
Common questions, answered.
Does K-1 income from US LLC make me taxable in India?
Depends on your Indian residential status. ROR (Resident + Ordinary Resident): yes, worldwide income including K-1 share taxable in India. RNOR / NR: foreign-source K-1 share typically not taxable in India. ROR status: your Indian ITR must include K-1 income + claim FTC against US tax paid via Section 90.
Can I claim US 1446 withholding as credit in India?
Yes - Section 90 FTC with Form 67. Credit limited to lower of (a) US tax on K-1 share, (b) Indian tax on same income head. Rule 128 governs computation. Form 67 must be filed BEFORE Indian ITR due date (31 July or 31 October depending on applicability).
What's the FEMA LRS limit for investing in US LLC?
USD 250K per Indian resident per FY. All eligible overseas remittances counted. Section 206C(1G) 20% TCS applies for amounts above INR 10 lakh for specific purposes. If investment makes you controlling partner: FEMA ODI framework applies + Form ODI APR annual filing + specific prior-approval scenarios.
Can my Indian income tax situation be optimized with proper US LLC structure?
Yes - structuring + residency planning + timing of K-1 distributions + specific FTC optimisation + specific entity classification (Form 8832 election C-Corp vs partnership) can materially impact Indian + US combined tax. BQP + US CPA integrated advisory recommended. Scope-based engagement.
Does BQP coordinate with US CPAs for US LLC Indian member matters?
Yes - standard. Specific US CPA partner network for Form 1040-NR + Form 1065 + 1446 withholding + treaty position + specific state tax. BQP covers Indian ITR + FTC + FEMA LRS + ODI + Form ODI APR + specific transfer pricing. Integrated engagement with specific client-approved US CPA. WhatsApp +91 78018 87130.
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